A workfare proposal for needy stockbrokers

DAN CHAMBERLIN

Published 4:00 am, Friday, March 7, 1997

PROPOSALS to have the government invest Social Security funds in the stock market must have the boys at Harry's of Hanover Street - a stockbrokers' watering hole in New York - salivating at the prospects of commission bonanzas.

While no one seriously disputes the fact that the Social Security system needs fixing, it raises a question: Is joining in the world's biggest crap shoot with the citizens' money the way to do it?

The tedious mantra endlessly repeated since the Reagan ascendancy is that everything works better when it is in the hands of the "private sector."

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I once asked a banker friend why it was acceptable that fiscal malfeasance, chicanery and downright incompetence were basically shrugged off in the private sector, but that the government was constantly blamed for its mistakes, often most vociferously by the very corporate entities that had been the beneficiaries of our lavish corporate welfare system.

He responded by saying that all of these things involved private money and not taxpayer dollars.

"You pays your money and you takes your choice," as the saying goes.

Unfortunately, this free market capitalist logic doesn't really apply in the case of Joe and Josie Citizen's Society Security contributions, which are deducted from their paychecks.

Since we live in a time when the public seems captivated by the notion that what goes up will never go down, and where a new mutual fund is born almost hourly, the decision no doubt will be taken to play in the Wall Street sandbox.

President Clinton, who, according to many critics, has become a "Republocrat," undoubtedly will go along with the plan. After all, he is in the mode of "securing a place in the history books," and putting the people's money in the hands of stockbrokers certainly is one for the books.

The verbiage out of Washington so far has been circumspect, which means heavy log rolling is going on behind closed doors.

Accepting the inevitable, as I'm afraid one must, I nevertheless have a few suggestions:

1. The government should set up its own brokerage firm.

Most people aren't aware that stockbrokers get commissions on both buy and sell transactions. In other words, they make money either way. Why shouldn't these commissions go into the Social Security pot?

This is not as off the wall as it sounds. The CIA has run clandestine airlines and book publishing firms. The FBI has operated a number of front companies, some quite profitable. Why not "Brokerage USA" ?

2. Who is going to police the practice of "churning" ?

That's how brokers of questionable probity generate extra commission income. The Securities and Exchange Commission already is eyed by the Republican right, with budget cuts threatened.

3. "Ending welfare as we know it."

Block grants and draconian measures limiting aid to dependent children are coming soon. A problem, of course, is nobody is quite sure where to find the jobs that pay a living wage to welfare recipients.

Why not train the brightest welfare recipients to be registered representatives and give them jobs at Brokerage USA? Anyone who has been around Wall Street knows that the registered rep examination is largely a matter of spewing out rules and regulations memorized by rote.

Being on welfare is not synonymous with being stupid. And you can bet anyone who has been dirt poor will cast a very beady eye on some of the overpriced and overvalued equities that are the underpinning of current bull market.

4. Short-term, bipartisan managers.

Finally, senior management of Brokerage USA would be limited to four years in control and would have a bipartisan makeup. In this way, "old boy (or "old girl" ) networks would be avoided.

Why would they serve? Because they really would care about the retirement welfare of their friends, relatives and the American citizenry. And they'd be well paid.

Examiner contributor Dan Chamberlin, a San Francisco writer, is an international media consultant.&lt;